The company behind the decentralized finance (DeFi) protocol AAVE has proposed to introduce a new native stablecoin named GHO that is pegged to the USD and will be decentralized.

This new idea is still under deliberation and will need to be approved by the economic powers by passing the governance vote before it can be approved for implementation. The new GHO coin will be minted by users that supply collateral if the proposal is approved.

According to the proposal, when users that buy the coin repay their debts or are liquidated, the GHO coins they purchased will be burned.

Aave is a well-known decentralized finance lending and borrowing company that boasts over $5.59 Billion in total asset value according to DefiLlama’s data. The total asset value has however been cut down by over 50% since the Terra-Luna fiasco resulted in the negative capitulation of the market.

According to the Aave company statement, the GHO coin will be hosted on the Ethereum mainnet and will be collateralized by other company assets that will continue to earn profit. Aave also introduced a new “facilitators” idea that allows a protocol to burn GHO tokens.

The interest rates accrued over borrowing the new token will be decided by the AaveDAO based on the current market conditions.

The proposal also stated that the fees for the GHO mint will generate profit for the Aave DAO. The interest that will be paid on borrowed GHO will also go directly to the Aave DAO and its community.

The statement also states that the GHO token is not just an idea in its early stages as its development is complete with its first audit scheduled for 11 July 2022.

Featured image source: Watcher Guru